The Roles of Risk and Ambiguity in Technology Adoption

28 Pages Posted: 4 Oct 2011 Last revised: 26 Mar 2015

See all articles by Bradford L. Barham

Bradford L. Barham

University of Wisconsin - Madison - Department of Agricultural & Applied Economics

Jean-Paul Chavas

University of Wisconsin

Dylan Fitz

University of Wisconsin - Madison - Department of Agricultural & Applied Economics

Vanessa Rios Salas

UW Madison

Laura Schechter

University of Wisconsin at Madison - Agricultural and Applied Economics; University of Wisconsin at Madison - Economics

Date Written: June 24, 2013

Abstract

We study the impacts of risk and ambiguity aversion on the adoption of new technologies, specifically genetically modified (GM) corn and soy seeds. We conduct experiments measuring risk and ambiguity aversion with Midwestern grain farmers. Risk aversion has little impact on the timing of adoption, but more ambiguity-averse farmers are the early adopters of GM corn. We hypothesize that this unusual finding is due to the fact that GM corn typically contains an insecticide-resistance trait which reduces the ambiguity of pest damages for adopters. This highlights the importance of distinguishing between risk and ambiguity when studying the effects of aversion to uncertainty on adoption.

Keywords: risk aversion, ambiguity aversion, technology adoption, genetically modified (GM) seeds

JEL Classification: Q12, Q16, C91, O33, M13

Suggested Citation

Barham, Bradford L. and Chavas, Jean-Paul and Fitz, Dylan and Rios Salas, Vanessa and Schechter, Laura, The Roles of Risk and Ambiguity in Technology Adoption (June 24, 2013). Available at SSRN: https://ssrn.com/abstract=1937849 or http://dx.doi.org/10.2139/ssrn.1937849

Bradford L. Barham

University of Wisconsin - Madison - Department of Agricultural & Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

Jean-Paul Chavas

University of Wisconsin ( email )

Taylor Hall
Madison, WI 53706
United States
(608) 261-1944 (Phone)
(608) 262-4376 (Fax)

Dylan Fitz

University of Wisconsin - Madison - Department of Agricultural & Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

Vanessa Rios Salas

UW Madison ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

Laura Schechter (Contact Author)

University of Wisconsin at Madison - Agricultural and Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

HOME PAGE: http://aae.wisc.edu/lschechter

University of Wisconsin at Madison - Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

HOME PAGE: http://aae.wisc.edu/lschechter

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